You can choose to either embed the image and it is part of the database and 'travels with it' if you move it around, or you can choose to put the image in the container file 'as a reference only', in which case you must always move the image with the database and, if moved or shared, all users must see the location of the image as the same pathname.
If you link the image and subsequently update the original it will update the image displayed to all in the database record that refers to it. Note that its name must be identical to the original.
If you embed images the file size will explode, in my experience. Maybe that will be different in FM12.